No, but individual small sellers will be put off by even more beurocracy and form filling. Prices will go up even more, for those who stick with it to cover their extra costs. No one wins. It’s all very sad.
I listened to a programme on the radio very recently which had a detailed article on this, and examples of a trader who was preparing e- books who decided to shut down her entire business after reading the regulations which come in 1st January 2015.
Apparently the Customs / Revenue people wanted a relaxation of the rules for very small traders as the regs were targeted against the big boys who evade VAT by registering in another country. But the EU bureaucrats decided there would be no exceptions. So every trader of digital goods has to comply, large or small.
As regards filling in VAT returns quarterly for C&E, it really is no problem if you have good records.
When I had a small limited Company, I registered for VAT part way through, as my turnover increased, and just filled in the financial details online quarterly, and it took no time at all. There was a glitch on the online instructions but I worked it out, and no queries arose.
So , if you have good records of all your transactions, ( and many out there really don’t ), then filling in the returns is not so onerous at all. It is a problem if your records are incomplete, inaccurate, etc.
Thank God there is at least a system out there where you don’t need to register in over 20 countries for VAT ! So the Customs and Revenue at least tried to soften the blow.
But if you have to charge VAT on items that previously you didn’t have to, then that can make the difference between making a margin or not, in some cases. Yes, some will have to put up their prices or stop selling digital goods.
If the UK ever come out of the EU, these rules might be revoked, but they might not.
Here is a link to HMRC latest guidance notes about VATMOSS - issued on 10th Dec 2014
Thanks everyone for the good wishes about my upcoming op. @ciesse @bojanglies @EileensCraftStudio
Shirley
It’s not just the filing vat returns it’s the fact you become the collector for all 28 member countries of the EU.
You need to supply two non contradictory pieces of evidence of the buyers location address.
Keep those details safe for 10years on a safe server.
Which is fine if you sell via a third party platform that does all the instant downloads for you, but not if you own your own website.
You have to comply with each separate EU members states own storage of information rules and regulations. Which is a nightmare as some are more controlled and tighter than others.
It’s all the extra work that’s the problem for many tiny sole traders working out of their kitchen.
Then theres the issue that most of us are not required to be VAT registered as we don’t earn anything like the 81k VAT threshold required by HMRC.
As of the latest VATMOSS statement thankfully for myself I can attach my pdf files to an email therefore circumvent this but who knows they may change this again in the next release.
If they do I’ll have no way to provide 2 non conflicting forms of evidence as to where my customer is based as all I’ll have is their address via the paypa invoice. I don’t have access to their IP address I can’t say hang on I can’t send your pattern until you send me some kind of proof of what country you reside in. I can’t say oh sorry I can’t sell to you because your address on payal says you are in X country of the EU as that will be classed as discrimination… Neither do I have a my own server to save all this information onto.
Now do you see what a problem this is causing?
BTW they are planning on extending this to all goods sold over the internet come 2016.
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If it does come in for physical goods too, I will just stop selling to EU countries. Most of my sales are to UK or non-EU countries anyway; it wouldn’t be worth the trouble for a handful of EU sales.
I agree with you I’ll just not put in a postage price for Europe.
oh have you noticed Ebay have already sorted themselves out for 2016 by signing all EU members to a shipping thingie where if a person in the EU wants to bid on your item they’ll get it coming up with the correct postage and there is nothing you as a vendor can do about it.
That’s for private sellers and for business as in most EU member countries there’s no such thing as a private buyer.
I will no longer use ebay even to sell my household items I no longer require I’ll simply give them to charity.
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Congratulations on the 500 sales, Shirley @WhimsyWooDesigns!
And good luck with the operation. They like to get you up and about pretty quickly after these knee & hip ops now, so no doubt you’ll be back soon! X
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I’ve been trying to think of how the collecting 2 pieces of non-contradictory evidence of the purchaser’s address could be possible to achieve and I keep hitting stumbling blocks.
I thought maybe if you have your own site, you might operate it like a club with free membership, but so that you collect a few personal details from your members. Then when they purchase something, you would have their address via PayPal, but then people often use other people’s (family) PayPal accounts which might not have the same address on, or they might be buying on behalf of someone else or as a gift
I’m not comfortable with having to store people’s personal information and I certainly can’t aford to pay for secure servers to hold it on for the next 10 years. My day-job company has difficuty enough doing that and it employs 400 people!
So I really can’t see a way round it all, except for creating a physical object that is then sent to the buyer. It is such a backwards step for Europe, just to catch a few greedy big fish. And then when it is applied to all sales in 2016, I think I might have to stop altogether, or operate a “Donations” box instead. This was supposed to be my pension plan, so I guess I’ll just have to work until I die after all.
If the authorities see lots of people attaching electronic pdf’s of digital media to avoid paying VAT if they are actually selling that digital media as an attachment, then they will close that loophole, for sure.
I am not saying that all pdf’s irrespective of content become digital media which should caught by the VAT rules.
For example, a medical report in pdf form may not generally be seen as digital media even if contains a few photos, it just happens to be the format that the specialist info is communicated in. ( That was also similar to an example given in a tax blog by tax specialists )
However, sell a digital music file to the EU countries or digital prints in digital file form, that may well be classed as digital media. It does not, in my view, matter whether you send that file as an email attachment or from your online shop, it is the media that becomes subject to the regs, but then again, I am not a tax lawyer, and only time will tell how the authorities interpret the rules. Lawyers will be making a fortune, as usual.
It does seem entirely wierd that one can print a digital pattern or a print and send it in the post, and effectively by-pass these rules.
So it is of concern if they do extend it to other goods. We will have to wait and see. I suspect that lobbying your Euro MP might be an option, but don’t assume they will be always be able to get a better deal for the UK. Even if we come out of the EU, if you want to trade with them, you have to abide by their rules, so there is no escape.
There will be grey areas, as in all regulations. Only last week an appeal court judge overturned a decision on a disability- discrimination case on bus/transport and wheelchair-user priority, and suggested the law might need changing. That’s after two lots of the Disability Discrimination Act, The Equality Act, a fair bit of case-law, and umpteen regulations and codes of practice. The average person hasn’t got a chance if they keep changing the goalposts.
The abolition of VAT threshold for smaller businesses will have the biggest effect of all, if it is extended to all goods.
Following on from our blog post on VATMOSS, we are speaking to HMRC this week to help clarify the situation for Folksy and for Folksy sellers. We will be asking them to clarify two things in particular, namely:
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What constitutes an e-service? Are PDF patterns an e-service; and if the means of delivery is not automatic but manual (email or similar) are they excluded?
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The HMRC’s definition of a marketplace. The examples used by the HMRC so far are where the marketplace is the merchant – a very different legal entity from Folksy which is not involved in the contract between buyer or seller and probably not (though this is a grey area) an agent in the sale. We need clarification on this to determine what our responsibilities are, and what support we need to provide our sellers.
It seems that the HMRC is still ironing out the details, but we hope we will know more after our discussion on Wednesday. We will keep you updated here and on our blog.
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Please don’t forget to sign the EU petition we are joining our fellow seller’s in the rest of the 28 countries of the EU.
There is also now one from Non EU seller who sell digital files to EU countries so this is world wide action now not just UK action but EU action and Worldwide action.
Also do not forget tomorrow’s worldwide twitter action hour either. It’s not just for those who sell digital its for those who wish to still be able to buy from our fellow EU digital file sellers.
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Twitter Storm tomorrow from 10am - #VATMOSS #EUVAT sorry I’d forgotten to add this to my previous post.
I’ve lost the EU petition from my email box after signing it and adding my comments I will try later to find the petition again
ok this is the information I will not be available for the twitter storm as I’ll be at the dentist
Twitterstorm today, 10.00am GMT please show support and use hashtag #EUVAT to get our message across. We are working for some concession for the smallest businesses so we are not crippled by this law. Targets are EU Commissioners, MEPs MPs and anyone else. Particularly
twitter.com/pierremoscovici
twitter.com/GoettingerEU
twitter.com/Ansip_EU
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ok here we go this is the next step
Just emailed David Gauke MP and my own MP pointing out exactly how the rules will affect me and my options. I’ve asked for a reply, but more likely to get one from my own MP than the Treasury.
We had a call with the HMRC about VATMOSS on Wednesday and James has now written a blog post about what was discussed. Things still aren’t clear, but we’re in the process of getting more clarification.
Here’s the link to the blog post > http://blog.folksy.com/2014/12/19/vatmoss-update
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Many thanks to Folksy admin @sianfolksy and james @uxtest for the updates etc.
Got my shiny new knee for Christmas now and you all have a great holiday.
Xxx
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Congrates on your new knew Shirley and Happy Christmas 
Sorry I’ve not been around to add any more details only I’ve been ill.
I’ve found out our emailing of pdf’s will not work for all EU member countries.
From what I understand from my friend in Germany they accept emailed pdf’s as ok like the UK. However I spoken to my Sister in Law in the Netherlands and the emailing of pdf’s are included as liable for VAT in the Netherlands. So it would appear we need to be careful some of the EU member states will still except us to count emailed pdf’s as VATable 
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It’s going to have to be printed of burned to CD then. That’s a shame, but just shows the ridiculousness of it all when any EU member can make up its own interpretations.
I have put three patterns on Payhip.com just to see how it goes. They don’t promote, it is simply a holding space for sales, but as they will handle the VAT it seems a good place to use for now.
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